Ever since the onset of the COVID-19 pandemic, supply-chain disruptions have added to the troubles of automakers like General Motors (NYSE:GM). Nevertheless, when terrific value presents itself, investors can assess the situation and consider seizing the moment. Even though there are challenges to overcome, I am still strongly bullish on GM stock.
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General Motors is a Detroit-based automobile manufacturer that’s been around for a very long time. However, General Motors is also quite modern, as CEO Mary Barra firmly believes in electric vehicles (EVs).
Now, you might not view General Motors’ latest operational report to be 100% positive. That’s fine, but informed investors should weigh all of the relevant facts, both good and bad. Overall, the balance of the facts appears to favor General Motors, even after a highly unfortunate event. So, without further ado, let’s get into that right now.
Baltimore Bridge Collapse: Not a Deal-Breaker for General Motors Stock
There’s no denying it. The Baltimore bridge collapse will be remembered as one of the most impactful events of 2024. The Port of Baltimore is one of the key ports for supply chains in the U.S., and after a container ship rammed one of its stanchions, everything suddenly became more difficult and complicated for automakers like General Motors.
It would be too optimistic to claim that General Motors won’t suffer any negative effects from the Baltimore bridge collapse. However, investors shouldn’t overestimate the extent of the impact. General Motors doesn’t anticipate that the incident will have a significant impact on the company. Moreover, General Motors is already working on rerouting vehicle shipments to other ports. Also, other ports along the East Coast should be able to absorb some of the spillover traffic from the Port of Baltimore.
JPMorgan (NYSE:JPM) economist Michael Feroli doesn’t seem to be overly concerned about General Motors’ financials after the Baltimore bridge collapse. Indeed, Feroli determined that the incident will “likely only have minimal implications for vehicle inflation.” Vessels are reportedly already being diverted to other East Coast ports, so again, there’s no need to worry too much about the long-term effects of the Baltimore bridge collapse on General Motors.
Delivery Decline Doesn’t Change General Motors’ Value Proposition
If you’re willing to look beyond the effects of the aforementioned bridge collapse, then it’s time to consider General Motors’ value to investors. There’s a fresh data report to look at, and while it indicates a vehicle delivery decline for General Motors, the big picture is still better than you might expect.
General Motors just published its sales figures for the first quarter of 2024. It’s a good-news, bad-news situation. The bad news is that General Motors’ vehicle deliveries declined 1.5% year-over-year to 594,233.
Let’s look at the bright side, though. The analyst consensus estimate called for General Motors to have delivered 591,300 vehicles in Q1 of 2024. Thus, General Motors did better than expected despite the year-over-year decline.
Besides, there are other positive points to take note of. For one thing, General Motors’ retail sales increased by 6% despite the slowdown in vehicle deliveries. This seems to imply that shoppers are willing to buy vehicles at higher prices.
Moreover, General Motors claims to have delivered more vehicles than any other automaker in the U.S. in Q1 2024. General Motors even managed to beat Toyota (NYSE:TM), which sold 565,098 vehicles in the U.S. during the quarter (to reiterate, General Motors delivered 594,233 vehicles).
Plus, here’s where the rubber really meets the road. I mentioned that General Motors’ quarterly retail sales increased 6%, but that doesn’t really tell the fully story. Impressively, Cadillac sales jumped 9% year-over-year, and Buick sales spiked 10% (Cadillac and Buick are owned by GM).
Finally, I can’t possibly overlook the unbelievable value proposition that investors can get today with GM stock. I can’t get over the fact that General Motors’ GAAP trailing 12-month price-to-earnings (P/E) ratio is just 6.2x. The sector median P/E ratio is nearly three times that figure, at 18.4x. This sounds like a screaming bargain to me.
Is GM Stock a Buy, According to Analysts?
On TipRanks, GM comes in as a Moderate Buy based on 13 Buys, six Holds, and one Sell rating assigned by analysts in the past three months. The average General Motors stock price target is $50.16, implying 11.7% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell GM stock, the most accurate analyst covering the stock (on a one-year timeframe) is Dan Levy of Barclays (NYSE:BCS), with an average return of 28.08% per rating and a 57% success rate. Click on the image below to learn more.
Conclusion: Should You Consider GM Stock?
Hopefully, you haven’t received the wrong message today. The Baltimore bridge collapse is a terrible incident that will have some negative effects on supply chains. However, this event doesn’t have to drastically alter your perception about General Motors’ growth prospects.
General Motors currently trades at a very reasonable valuation, and the company’s Cadillac and Buick divisions appear to be thriving. So, don’t let headline risk deter you from a perfectly viable investment in an iconic American automaker. In the final analysis, I am definitely considering GM stock, as it looks like a tremendous bargain that shouldn’t be ignored.
